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Are Analysts Looking on the Sunny Side for SunPower in 3Q16?

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Dec. 4 2020, Updated 10:53 a.m. ET

SunPower’s revenue estimates

SunPower (SPWR) reported about $380 million in consolidated revenue for 3Q15. Analysts estimate that the company will report revenue of $778 million in 3Q16, which is close to a 105% increase on a YoY (year-over-year) basis.

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Revenue recognition

Revenues of upstream solar (TAN) companies like SunPower (SPWR), First Solar (FSLR), Canadian Solar (CSIQ), SunEdison (SUNE), and Trina Solar (TSL) can fluctuate depending on their revenue recognition model. Also, seasonal changes in weather patterns can impact reported revenue. Revenue recognition, in turn, depends on the status of ongoing projects and the schedule of the future project pipeline.

The anticipated increase in SPWR’s 3Q16 revenue is primarily due to expected recognition of revenue from sale of company’s majority stake in its 102 mW (megawatt) Henrietta project. SunPower sold the controlling stake of its Henrietta project to Southern Company (SO) in 2Q16. Moreover, the company is expected to recognize revenue from the sale of its minority stake to its yieldco, 8Point3 (CAFD), before the end of 2016.

SunPower expects to derive a substantial portion of its fiscal 2016 revenue through the sale of its projects in the United States. The company expects to complete a substantial portion of these projects by the end of fiscal 2016. As a result, analysts anticipate that the company will report higher revenues in 2H16 when compared to the first half of the year. Analysts’ expectations are in line with the company’s fiscal 2016 guidance.

Fiscal 2016 guidance

SunPower (SPWR) revised down its fiscal 2016 EBITDA and non-GAAP[1. generally accepted accounting principles] revenue guidance after its 2Q16 earnings results.

For fiscal 2016, SunPower now has EBITDA guidance of $275 million–$325 million compared to its previous EBITDA guidance of $450 million–$500 million. SPWR revised its non-GAAP revenue from $3.2 billion–$3.4 billion to $3.0 billion–$3.2 billion after its 2Q16 results.

For 3Q16, the company has non-GAAP revenue guidance of $750 million–$850 million and expects its non-GAAP gross margin to be in the range of 16.5%–18.5%.

In the next part of our series, we’ll take a close look at SunPower’s 3Q16 margin estimates and find the reason behind the downward revision of SPWR’s fiscal 2016 gross margin guidance.

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